How do I correct private expenses in the BV annual accounts?

The short answer

With a correction that fits the real nature of the payment. A private expense is not automatically a business cost or a dividend.

Legal basis: art. 2:216 and 2:362 DCC

How do you recognise private payments?

A payment with the BV's bank card is not business-related for that reason alone. Look at what the amount was spent on and who benefits economically. For private payments for the director-major shareholder (DGA) a repayment receivable may arise, but questions of wages or distributions also play a role. Choose the treatment on the basis of facts and agreements, not on the profit you would like.

Make a list of the doubtful payments with date, amount, supplier and supporting document. Ask the DGA to explain the business reason or private purpose. Split mixed expenses where necessary. A business trip with a private extension, for example, calls for a different assessment than a fully personal purchase. Include earlier years when a recurring pattern becomes visible. Do not automatically book a whole category to the current account without understanding what happened. Some amounts may well be business costs, while for other amounts tax corrections or formal resolutions are needed.

When do you book a receivable from the DGA?

When the BV has merely advanced a private amount and repayment is realistic, treatment as a receivable from the DGA may be appropriate. Check the agreements, interest and repayment capacity. The Dutch Tax Administration (Belastingdienst) stresses that borrowing from your own BV requires business-like terms. A long-growing current account is not automatically a series of small advances. If there is in fact remuneration or a distribution, have the tax and legal consequences assessed. Art. 2:216 DCC is relevant for distributions. An entry described as 'dividend' does not in itself create a valid distribution resolution or board approval.

Check the VAT as well. A private expense can affect the deduction of input VAT or require a correction. The rules differ per type of expense and use. A correcting entry in the profit and loss account does not automatically correct a previously filed VAT or payroll tax return. Discuss which returns must be amended and which supporting documents are needed. Art. 2:362 DCC requires the annual accounts to give the right view. Therefore let all related items follow: costs, receivable or liability, tax positions and the final result. Changing only one ledger account may be insufficient.

Which VAT corrections are needed?

Process the chosen corrections with a clear explanation and have the DGA confirm the remaining current account balance. Keep the support so the bookkeeper does not have to ask next year why a private payment was treated as a receivable. Then make practical agreements about payment cards, expense claims and supporting documents. A separate private payment prevents a lot of correction work. For annual accounts that have already been adopted or published, it must also be assessed whether and how the earlier documents must be corrected. The right route depends on the seriousness and consequences of the error; a silent adjustment in the new financial year is not always enough.

Sources

• Dutch Tax Administration: borrowing money from your BV
• Dutch Tax Administration: which VAT is deductible?

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